Token liquidity — the key to success for blockchain start-ups

There has been an explosion in the growth of blockchain-based start-ups and their concomitant fundraising ICOs (Initial Coin Offerings) or ITOs (Initial Token Offerings). There is no shortage of investors into these enterprises. Close to $6 billion was raised in 2017, with a record $1.2 billion in December alone.

ICOs are becoming the new normal for raising capital. In fact, according to Goldman Sachs, ICO’s and token sales are outpacing traditional venture funding.

The barriers to entry for this type of fundraising are very low. You don’t even have to prove that a company exists. You don’t need a minimum viable product (MVP) or a financial statement. There is little to no regulatory oversight. This has led to scams, tongue-in-cheek launches, as well as many launches with not much more than a vague blockchain idea and the hope of getting rich quickly. By the same token, many investors have not been interested in the underlying product or business — they have just been speculating in the hope of quick profits.